Aphria CEO Vic Neufeld steps down amid uncertainty over firm's future

Neufeld is seen at Aphria's greenhouse in Leamington Ont. in 2014. GEOFF ROBINS

Aphria Inc. [s apha] Chief Executive Vic Neufeld will step down from the Canadian marijuana producer, Canada's Globe and Mail reported late Thursday night. Quintessential tweeted Friday that the changes "clearly vindicate our short thesis".

But after a rocket-like ascent, Aphria became mired in controversy at the start of December, when a damning report by a short seller made the company's stock plummet. "With a new management team the company has a chance to a brighter future and we are accordingly moving on to new projects".

"It was just time for us to move aside", Neufeld said on the company's earnings call Friday. "This has nothing to do with the short-sellers' report, the review, the valuation of assets". Aphria's newly appointed chairman, Irwin Simon reiterated that and called Neufeld and Cacciavillani "consummate entrepreneurs". He added, "the Aphria dream would not have become a reality without them". The Canadian-based marijuana grower said Mr. Neufeld will leave in the coming months, sending its shares down 2.4% to $6.42.

This independent committee is making "good progress", and intends to fully address the short-sellers allegations, Neufeld said Friday.

Aphria reported $21.7 million in revenue in its fiscal second quarter that ended November 30, up 63 per cent from the same period a year ago, but short of the $28.8 million that analysts had expected. It lost an adjusted 0.01 Canadian dollars a share as net revenue grew 63% versus a year ago to 21.67 million Canadian dollars, or $16.3 million.


Margins declined due to lower effective selling prices in the adult-use market as well as temporarily lower yields and higher production costs, Aphria said.

Aphria sold 3,408.9 kilograms of cannabis, up 92% from the fiscal first quarter. Sales to the adult-use market, which had a lower average selling price of C$6.32, inclusive of excise tax, compared to C$7.51 in the medical-use market.

The company, which recently received an all-stock hostile bid from U.S. cannabis retailer Green Growth Brands Ltd, said total revenue more than doubled to C$21.7 million (US$16.4 million). Aphria expects to produce 255,000 kilograms of pot by the end of 2019, up from 35,000 kilograms now, as new facilities come online. "The Part IV and V expansions of Aphria One are now complete and awaiting Health Canada approval, while an application for a cultivation license at Aphria Diamond has been submitted and is awaiting pre-cultivation inspection".

In its management's discussion and analysis filing, Aphria said it is "unable to determine whether there will be any potential regulatory and/or enforcement action resulting from [the short-sellers report] or, if any such action is taken, whether it will have a material adverse effect on the company's business, financial position, profitability or liquidity". Year-to-date, APHA has gained 22.67%, versus a 3.25% rise in the benchmark S&P 500 index during the same period.

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